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Subsidies stall technology

Gil Gullickson | Jul 11, 2001

Necessity spurs technology while farm subsidies dampen the desire to develop technology, according to Michael Horsch, a German farmer and agribusinessman. “Subsidies are viruses that get into your brain,” says Horsch, a co-owner of Horsch Anderson, an Andover, SD, firm that just launched a self-propelled air seeder. “In western Europe, farmers receive $130 per acre subsidies. Why do they want to change to become more efficient if they get that?”

Horsch knows from firsthand experience. He and his family farm in Bavaria, a German province where land productivity is often mediocre. To compensate for low land quality, they experimented with no-till and minimum till. In the early 1980s, the Horsch family started a small machinery company that produces conservation tillage equipment. However, abundant subsidies gave German farmers no incentive to adopt no-till or minimum till.

However, matters changed in 1990, when the former Soviet Union relinquished control of Eastern Europe. Unlike western European farmers, eastern European farmers were not subsidized.

“Bavaria is only 50 miles away from eastern Europe,” Horsch says. “Within two months, I realized there was a huge market opening up.”

Since that time, his family’s business has grown from a small blacksmith shop into one that is Europe’s top minimum- and no-till company. Since that time, western Europe also has scaled back its subsidies, opening up markets for the Horsch business. These developments mean serious competition for farmers in the United States.

“Don’t you Americans think that we in Europe can’t compete,” he says. “A lot of us are now embracing technology. We can compete with your costs in corn and wheat. And in Europe, we have a half-billon people in a 1,000-mile radius. We can compete with your production costs because we have those markets in our backdoor.”

Horsch does not oppose payments in the event of disastrous weather. However, he says that subsidies designed to prop up income do more harm than good in the long run.

“If your Congress one day says no more, you will be far worse off then than you would be if your subsidies were killed right now,” he says.

So how do you put food on the table with no subsidies? “You have to increase yields and also decrease costs,” Horsch says. “Many farmers want to drop costs, but not increase yields.”

To pump yields, American farmers need to emphasize agronomic practices like seed environment and fertilizer placement. Horsch has teamed up with Kevin Anderson, an Andover, SD, farmer and inventor of the Anderson Opener, a fertilizer opener that places seed and fertilizer in optimum areas. The Openers also break up a microcompaction zone an inch below the seed trench that often develops with conventional openers.

“We find that this zone has an adverse effect on early germination,” says Horsch. “For a few days, the seed has food in the soil compaction zone. The plant really gets under stress when the food from the seed is gone, and it has to put its roots in the soil.”

By breaking the zone, the Anderson Opener helps ensure that seedlings have an uninterrupted food supply during this crucial time.

Such technology would continue to be developed out of necessity if subsidies were scrapped, says Horsch.